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Is Specific Performance an Argument against Libertarianism?

Here is an issue that I am struggling with at the moment. Imagine we live in a libertarian society. Everyone owns themselves and their private property. Everyone is able to make contracts with others on the basis of this property. In this society, let us say a billionaire is very worried about his health. He imagines that at some point he might get sick and will need a new liver. So he is looking for potential donors that have livers that are compatible with his body. He finds 10 people who are suitable and offers each of them 1 million Dollars in return for their liver in case he needs it. The potential donors can see that the chances are very slim that they will ever have to deliver on this agreement. So chances are high that they will get 1 million for nothing.

But now it happens that this billionaire does get sick and needs a new liver. So he picks one of the 10 donors who he has a contract with and demands that he delivers his part of the contract. It is clear that this comes down to almost a death sentence. The person might survive plugged to machines for the rest of his live, but any good life is over for him. The question is, can he break the contract? Can he for example say, instead of giving you my liver, I would like to settle in cash. Or is it OK for the billionaire to insist on the specific performance and enforce the contract with all means necessary?

Another example, I have a contract with a women to have sex with me for money. I pay her in advance and we meet up. Just before we are about to have sex, she has second thoughts. She says she cannot do it and gives me my money back. Can I reject the money and force her to have sex with me, because that was what the contract said?

To both of these examples my gut feeling is that people can indeed break their contract and settle in cash instead. Forcing people to die or to have sex, even when they at some point seemed to have voluntarily agreed to it seems very cruel to me. But I also like to call myself a Libertarian. All Libertarians I know, emphasize that we own our own bodies. That is why libertarians insist that drugs cannot be made illegal or prostitution needs to be allowed. But if I have ownership in my own body, then I should be able to sell it like any other property.

Let us say I am selling a stock to someone. We make a contract and agree on a price. After we have singed the contract he pays me and therefore the ownership of the stock changes hands. Now I have seconds thought, because the stock is now suddenly trading at a higher price. So I think I have made a bad deal. Can I now say, here is your money back, I will keep the stock? Of course not. That would be the end of contracts. The whole point of a contract is that you cannot legally break it.

But if this is true and if I really own my own body then the only logical conclusion that I can draw from that is that I indeed can sell my body or parts of it like any other property. Once sold, I should not be able to get out of that contract legally. At the moment I cannot see how anything else can be called the libertarian position.

But that does not change the fact that I am very uncomfortable with this idea. In other words, if this is the libertarian position, I might have found a limit to how far I am willing to go along with Libertarianism. I tend to think that contracts involving a specific performance of someone’s body should be able to be broken. In other words, it should always be possible to settle such a contract in cash or other properties. However, if that is true than I suppose I have a fundamental problem with the idea of self ownership, have I not?

I think so too. But it doesn’t seem to be Libertarian, as it is in contradiction to self ownership. With every other property the deal is done once you have signed the contract. Self ownership is the only property with which you can just break an existing contract and settle in cash. As I said, I am all for it, but it seems like you cannot be for it and be a libertarian.

You will ultimately have to enforce a contract with force. Even behind an arbitration process is the thread of force. Otherwise, one party might just decide not to talk to you at all. Prevention is good and well, but then you won’t always success. Some people might carelessly sign a contract and then what?

“By saying clauses or arbitration cannot work due to non cooperation of one party, how does it?”

You need to ultimately be able to force a non-compliant party to comply to a contract. If you don’t have that, then that is the end of contracts. In that case you can only do business with people that you know you can trust.

“Common sense and a sense of justice and lawful outcomes, yes, driven, sometimes, by philosophy, will build cancellation terms and norms, plus guide judgements in arbitration.”

Common sense, a sense of justice and lawful outcomes are all things based on ideas, in other words they are based on philosophy. That is why they mean very different things to people in different regions of the world and at different times in history. They have all been influenced by different philosophers. But in order to be sure that you are advocating the right ideas, you need to understand them first. And that is what this is about. To make sure that at the end, the majority of guns will be on the side of the right people.

Suppose someone signs a specific-performance contract to give a pint of his rare blood to the billionaire for a life-saving operation (perhaps there are other people too, if more than a pint is required). But when the time comes, for whatever reason, he prefers to give the money back and let the billionaire die. Moreover, had he not made the contract, then there are other people who could have and would have–and who probably would not have broken the contract. Does enforcing specific-performance seem unacceptable in this case?

The (non-swimming) owner of a swimming pool employs someone as a life-guard. One day, a swimmer appears to be drowning. The life-guard has never liked that swimmer, so he decides to let him drown. The owner points his gun at the life-guard (this is the USA) and says, “Save the swimmer or I will shoot you in the leg.” Is the owner’s behaviour unacceptable?

That is a good point Jan. I agree these specific performance contracts need to be honored. But I still have a problem with raping a prostitute or killing someone for his liver. I suppose I have a hierarchy of values. Your own human life is at the top of it. You cannot force someone to die for you. But you can force someone to rescue you, at least morally. In the same sense I always had a problem with the lifeboat example. If you have a boat and see someone drowning, not only do you need to let him into your boat, but you have an obligation to actively help him as long as that does not cause danger to your life or body, with or without contract. Then comes the human body and then the rest of property. But only some of this seems to be libertarian. The highest principal is not liberty but the human life. The often do not clash, but sometimes it seems they do.

Thank you, Nico. So, at least some specific-performance is acceptably enforceable. But there is no explicit or implied specific-performance contract with a prostitute. Therefore, enforcing compensation is all that would normally be allowable. And taking someone’s liver is more likely to leave him on renal dialysis until a replacement can be found.

Proactively causing someone to die is manslaughter, at least. And proactively breaking a specific-performance contract (even to save yourself) and thereby causing the other party to die is also manslaughter, at least. You appear to be, unintentionally, defending such manslaughter.

The world has innumerable people who will die from non-drowning causes if we don’t give all the money we can to save them (“as long as that does not cause danger to your life or body, with or without contract”). We don’t think we have that obligation. The highest principle for social interaction does seem to be liberty.

“But there is no explicit or implied specific-performance contract with a prostitute.”

There could very well be. In Germany some landlords were making news for making contracts with tenants requiring them to pay rent in form of sex services. I don’t know how far German court enforce such contracts. They certainly do not allow anyone to rape another person. But it is an explicit contract with someone over sex services. Possible, I probably not uncommon, especially if these type of contract were more legal.

“Proactively causing someone to die is manslaughter, at least. And proactively breaking a specific-performance contract (even to save yourself) and thereby causing the other party to die is also manslaughter, at least. You appear to be, unintentionally, defending such manslaughter.”

Yes I do. I think you can always decide to choose your own life over someone else’s life.

“The world has innumerable people who will die from non-drowning causes if we don’t give all the money we can to save them (“as long as that does not cause danger to your life or body, with or without contract”). We don’t think we have that obligation.”

I tent to think you do. But of course you need to prove that you were aware of the situation of a concrete person and aware of the fact that you could help. That is clearly the case if you watch someone drowning from a boat. Globally, redistributing wealth on a big scale usually makes things worse not better. So that is not a solution. If it were, that is if we could stop people for example starving with this, I might be in favor of it.

“That may be the preferred payment but it is probably not part of a specific-performance contract. So monetary compensation would be all they could sue for.”

Why not? If they make a contract saying flat A will be rented out for a total of two times sex a month than that seems like a specific-performance contract to me. You could also negotiate a long term deal with a prostitute over a certain period of time. Prostitutes could be employees of pimps as well.

“Then the billionaire can enforce by that principle too. But he will be on the side of liberty.”

But he would need to actively kill someone instead of passively let someone die. I think there is a moral difference.

“But there are charities that do save lives in a variety of ways.”

Sometimes they do, more often they don’t and create more misery. And it is very difficult to say when the former and when the latter is the case. Real help can only be on an individual level. As soon as you start organizing it on a big scale you quickly run into difficulties and often get the opposite results that you want. All of this would require people to actively investigate what they could do. That is different from a situation in which it is clear that someone is in a life threatening situation, you know you could easily help him, but you don’t.

“That seems to be a fact that we are all aware of. And yet you do not give them most of your income.”

We are not really aware of it. I currently do not know any concrete person in a life threatening situation in which I know what to do to save his life. If I did, I would do it, and so would most people. The fact that they don’t, shows more that they are not aware of such situations. Ok, the price would probably matter. You would probably not be required to ruin yourself financially. But if it is not a huge cost than that can be expected.

>If they make a contract saying flat A will be rented out for a total of two times sex a month than that seems like a specific-performance contract to me.

That is just specifying the form of payment that the seller prefers. An explicit specific-performance contract would probably need to specify that such sex would be enforceable by rape if it were not freely given. Without that, an owner is normally only entitled to the monetary value of his loss.

“Then the billionaire can enforce by that principle too. But he will be on the side of liberty.”
>But he would need to actively kill someone instead of passively let someone die. I think there is a moral difference.

But he would be reactively killing in self-defence if he is killing someone who is proactively breaking a life-saving contract with him.

“But there are charities that do save lives in a variety of ways.”
>Sometimes they do, more often they don’t and create more misery. And it is very difficult to say when the former and when the latter is the case. Real help can only be on an individual level. As soon as you start organizing it on a big scale you quickly run into difficulties and often get the opposite results that you want. All of this would require people to actively investigate what they could do. That is different from a situation in which it is clear that someone is in a life threatening situation, you know you could easily help him, but you don’t.

There are advertisements by charities of people in life-threatening situations whom we can easily help by sending money to the charity. Charities, unlike government “aid”, are fairly efficient at doing good.

“That seems to be a fact that we are all aware of. And yet you do not give them most of your income.”
>We are not really aware of it. I currently do not know any concrete person in a life threatening situation in which I know what to do to save his life.

It seems to be unnecessary to know such people personally. There are relatively inexpensive medical treatments for various deadly diseases that we can help to fund and thereby save lives.

“That is just specifying the form of payment that the seller prefers. An explicit specific-performance contract would probably need to specify that such sex would be enforceable by rape if it were not freely given. Without that, an owner is normally only entitled to the monetary value of his loss.”

I don’t understand this. Why is the owner only entitled to the monetary value of his loss in Libertarianism? If the contract states a specific currency, why can you just switch to another one? And what about the pimp employing prostitutes?

“But he would be reactively killing in self-defence if he is killing someone who is proactively breaking a life-saving contract with him.”

Yes, that is the libertarian argument. But I am not happy with it. It feels wrong.

“There are advertisements by charities of people in life-threatening situations whom we can easily help by sending money to the charity. Charities, unlike government “aid”, are fairly efficient at doing good.”

That implies that we could have a world without poverty if only people were giving enough to charity. I disagree with that. I had a monthly donation for the red cross for a while. I cancelled it, when I realised that this industry is predominantly serving the people employed in it. Charity, can be good in urgent situations, like after a natural disaster. It is not a solution to poverty or bad medical infrastructure. If you start to help people with charity on a big scale, you start to incentivise them to not do something against the underlying structural problem.

But you have convinced me that demanding mandatory proactive help from people probably goes to far. However, I still thing you cannot actively prevent a drowning person from entering your boat.

“That is just specifying the form of payment that the seller prefers. An explicit specific-performance contract would probably need to specify that such sex would be enforceable by rape if it were not freely given. Without that, an owner is normally only entitled to the monetary value of his loss.”
>I don’t understand this. Why is the owner only entitled to the monetary value of his loss in Libertarianism?

I am currently inclined to see it this way. As long as the owner has been fully compensated then he has not been proactively imposed on. But if he insists on something that imposes on the debtor more than is necessary to achieve this, then that looks like a proactive imposition by him. Suppose I contract for item X from you and I value it at £1,000. It subsequently transpires that giving me X will cause some disaster for you that is worth -£10,000 (minus £10,000) to you. If you give me £1,000 I have the value I was after. If, out of spite, I insist on X even though it is only in itself worth £1,000 to me solely in order to damage your interests, then that looks like an unnecessary proactive imposition.

> If the contract states a specific currency, why can you just switch to another one?

Because we are not usually after things in themselves but their value to us. If we have that value, then we have not been cheated.

>And what about the pimp employing prostitutes?

The pimp wants the income that the prostitutes will bring. If the prostitutes win the lottery, or whatever, they can give the pimp that income without a loss to him.

“But he would be reactively killing in self-defence if he is killing someone who is proactively breaking a life-saving contract with him.”
>Yes, that is the libertarian argument. But I am not happy with it. It feels wrong.

To deprive someone of a life-saving thing that one has contracted to give (even at the loss of one’s own life), feels wrong to me.

“There are advertisements by charities of people in life-threatening situations whom we can easily help by sending money to the charity. Charities, unlike government “aid”, are fairly efficient at doing good.”
>That implies that we could have a world without poverty if only people were giving enough to charity.

No, it only implies that we could help more than we do. It does not even imply that charity is the best solution. That is free trade and free migration (subject to private streets, etc.).

>I disagree with that. I had a monthly donation for the red cross for a while. I cancelled it, when I realised that this industry is predominantly serving the people employed in it.

There is inefficiency and corruption in charities. Some are better than others. But to give nothing is to be innocent, as far as I can see.

> Charity, can be good in urgent situations, like after a natural disaster. It is not a solution to poverty or bad medical infrastructure. If you start to help people with charity on a big scale, you start to incentivise them to not do something against the underlying structural problem.

Agreed. That is the moral hazard, as it is sometimes called.

>But you have convinced me that demanding mandatory proactive help from people probably goes to far.

I guess it will cause a moral hazard that makes things worse in the long run even if it helps a little now and then. But some duties to help can be achieved contractually (e.g. “All residents must help or call emergency services if they see that some situation requires it”).

>However, I still thin[k] you cannot actively prevent a drowning person from entering your boat.

Perhaps we are innocent (but despicable) from a libertarian viewpoint if we row away. But if we keep pushing him away with an oar, then that looks very dubious. And anyone who has clambered aboard to save his own life cannot be pushed back in to his death. But he would owe us some damages if we resent his presence.

“I am currently inclined to see it this way. As long as the owner has been fully compensated then he has not been proactively imposed on.”

Now you are changing the example. Valuations are subjective not objective. So if someone voluntarily accepts cash or a different currency then there is no problem. That is true for any contract. If both sides agree to change it, then there is no problem. But what if he says, I don’t want the money, I want the sex, because he values the sex more? Can he then rape her?

“But if he insists on something that imposes on the debtor more than is necessary to achieve this, then that looks like a proactive imposition by him. Suppose I contract for item X from you and I value it at £1,000. It subsequently transpires that giving me X will cause some disaster for you that is worth -£10,000 (minus £10,000) to you. If you give me £1,000 I have the value I was after. If, out of spite, I insist on X even though it is only in itself worth £1,000 to me solely in order to damage your interests, then that looks like an unnecessary proactive imposition.”

Valuations are subjective Jan. That is one of the most important insides of economics. He clearly values X more than £1000. How much more, only he can know. And that the other party has made a mistake is not really his problem. In that case, I could also demand my stock back, if it has gone up after I sold it.

“The pimp wants the income that the prostitutes will bring. If the prostitutes win the lottery, or whatever, they can give the pimp that income without a loss to him.”
And if she does not win the lottery and has no means to pay him back, he can rape her?

“To deprive someone of a life-saving thing that one has contracted to give (even at the loss of one’s own life), feels wrong to me.”
We have to disagree on this,

“And anyone who has clambered aboard to save his own life cannot be pushed back in to his death. But he would owe us some damages if we resent his presence.”

“I am currently inclined to see it this way. As long as the owner has been fully compensated then he has not been proactively imposed on.”
>Now you are changing the example. Valuations are subjective not objective. So if someone voluntarily accepts cash or a different currency then there is no problem. That is true for any contract. If both sides agree to change it, then there is no problem. But what if he says, I don’t want the money, I want the sex, because he values the sex more? Can he then rape her?

You have created the problem by insisting on conflating ordinary contracts with contracts for specific performance. Just because of the often-onerous nature of enforceable specific performance, it seems necessary to make that absolutely explicit in the contract. Otherwise, most ordinary contracts are usually understood, and correctly legally interpreted, as being for the financial value of the loss if one party has to sue. And here we avoid (too much) subjectivity by looking at market values and, if necessary, what is reasonable under the circumstances.

> In that case, I could also demand my stock back, if it has gone up after I sold it.

I don’t see where you get that from. A sold stock is gone at the agreed price.

“The pimp wants the income that the prostitutes will bring. If the prostitutes win the lottery, or whatever, they can give the pimp that income without a loss to him.”
And if she does not win the lottery and has no means to pay him back, he can rape her?

Only if he has an explicit contract for doing that, which she has wittingly and willingly signed (which is hardly likely).

“To deprive someone of a life-saving thing that one has contracted to give (even at the loss of one’s own life), feels wrong to me.”
>We have to disagree on this,

“You have created the problem by insisting on conflating ordinary contracts with contracts for specific performance. Just because of the often-onerous nature of enforceable specific performance, it seems necessary to make that absolutely explicit in the contract. Otherwise, most ordinary contracts are usually understood, and correctly legally interpreted, as being for the financial value of the loss if one party has to sue. And here we avoid (too much) subjectivity by looking at market values and, if necessary, what is reasonable under the circumstances.”

That is the current legal practice. You are currently not allowed to sell your body, because we do not have a libertarian legal system. But is it reasonable to assume this under libertarian principals? If so why?

“I don’t see where you get that from. A sold stock is gone at the agreed price.”

So you cannot change your mind here, but you can change your mind when you sell your body. Why? That is really the issue.

“Only if he has an explicit contract for doing that, which she has wittingly and willingly signed (which is hardly likely).”

How likely it is, is a different matter. I think it is more likely than you think. People sign all kinds of contracts that they have not thought through. I just disagree that this is a valid contract, even if it is signed.

“You have created the problem by insisting on conflating ordinary contracts with contracts for specific performance. Just because of the often-onerous nature of enforceable specific performance, it seems necessary to make that absolutely explicit in the contract. Otherwise, most ordinary contracts are usually understood, and correctly legally interpreted, as being for the financial value of the loss if one party has to sue. And here we avoid (too much) subjectivity by looking at market values and, if necessary, what is reasonable under the circumstances.”
>That is the current legal practice. You are currently not allowed to sell your body, because we do not have a libertarian legal system. But is it reasonable to assume this under libertarian princip[le]s? If so why?

Yes, ‘personal services’ are not enforceable under state law. But freedom of contract seems to be part of liberty, and extremely useful. And I don’t see why that would not include contracts to enforce people to personally do or give what they have contracted to do or give. Sometimes it will be valuable to have such contracts, for one reason or another. However, such contracts are clearly likely to be more onerous (because of their personal nature) than contracts that allow only financial remedies in the event of a breach. So I would expect contracts for specific performance of personal services to cost the buyer significantly more, and to need to be very specific about what is allowed and how it will be done, and with extra safeguards to ensure that those contracting to provide the services are fully aware and fully willing. Absent that, I would expect a presumption that ordinary contracts involve only financial remedies for personal services. This seems to me to be a reasonable prediction, but the free market and libertarian legal arbitration (operating on evolving and refining libertarian principles) might well throw up something rather different, or at least refinements and even different rules in different places.

“I don’t see where you get that from. A sold stock is gone at the agreed price.”
>So you cannot change your mind here, but you can change your mind when you sell your body. Why? That is really the issue.

When you sell a stock the deal is completed (it is history) and no further action is required, let alone of a personal-service nature. To “change your mind” on that is only to regret what you did in the past. With contracts for personal services, it is on-going. Whether or not you can “change your mind” about the continuing contract, and pay damages, will depend on the contract. But, I predict, most people, most of the time, will not want to risk the potential onerousness (for the provider) or higher price (for the buyer) of a contract for specific performance of a personal service. I could be wrong about this, but I would be very surprised if all personal-service contracts were (in a libertarian society) automatically and universally interpreted as either enforceable or as unenforceable. The distinction is useful and so it will likely be made.

“Only if he has an explicit contract for doing that, which she has wittingly and willingly signed (which is hardly likely).”
>How likely it is, is a different matter. I think it is more likely than you think. People sign all kinds of contracts that they have not thought through. I just disagree that this is a valid contract, even if it is signed.

A mere signature is highly unlikely to be enough, just because of the onerous nature of the contract (this is analogous with criminal evidence standards being higher than that of those for civil cases). Once such contracts are sufficiently hedged about with appropriate legal safeguards (including evidence that signers have “thought through” the consequences, and not signed on a whim, while drunk, misunderstanding what is involved, without legal witnesses, etc.), I would not expect such contracts to appear so alarming (if alarming at all) and thereby not to be an unacceptable consequence of libertarian principles (as I currently interpret them, at least, and I might be mistaken about my interpretation).

“Yes, ‘personal services’ are not enforceable under state law. But freedom of contract seems to be part of liberty, and extremely useful. And I don’t see why that would not include contracts to enforce people to personally do or give what they have contracted to do or give. Sometimes it will be valuable to have such contracts, for one reason or another. However, such contracts are clearly likely to be more onerous (because of their personal nature) than contracts that allow only financial remedies in the event of a breach. So I would expect contracts for specific performance of personal services to cost the buyer significantly more, and to need to be very specific about what is allowed and how it will be done, and with extra safeguards to ensure that those contracting to provide the services are fully aware and fully willing. Absent that, I would expect a presumption that ordinary contracts involve only financial remedies for personal services. This seems to me to be a reasonable prediction, but the free market and libertarian legal arbitration (operating on evolving and refining libertarian principles) might well throw up something rather different, or at least refinements and even different rules in different places.”

What we will practically see is different from the question of whether it is libertarian. I agree with you that nothing seems to contradict the idea that slave contracts are libertarian. However, I do not agree with slave contracts whether they are libertarian or not. So I seem to have a higher principal than liberty.

“When you sell a stock the deal is completed (it is history) and no further action is required, let alone of a personal-service nature.”

Ok, then say someone rents out a flat to someone else. Can he just change his mind in the middle of the renting period. I don’t think so.

“I could be wrong about this, but I would be very surprised if all personal-service contracts were (in a libertarian society) automatically and universally interpreted as either enforceable or as unenforceable. The distinction is useful and so it will likely be made.”

But why is it useful, if liberty is the highest principal? There is something else going on here.

“A mere signature is highly unlikely to be enough, just because of the onerous nature of the contract (this is analogous with criminal evidence standards being higher than that of those for civil cases). Once such contracts are sufficiently hedged about with appropriate legal safeguards (including evidence that signers have “thought through” the consequences, and not signed on a whim, while drunk, misunderstanding what is involved, without legal witnesses, etc.), I would not expect such contracts to appear so alarming (if alarming at all) and thereby not to be an unacceptable consequence of libertarian principles (as I currently interpret them, at least, and I might be mistaken about my interpretation).”

If that is true, then that says something about liberty. You need to have a control level that controls, whether someone has made a good decision to sign the contract. That we need such a level, basically says that people cannot always be let to make their own decision.

>What we will practically see is different from the question of whether it is libertarian. I agree with you that nothing seems to contradict the idea that slave contracts are libertarian. However, I do not agree with slave contracts whether they are libertarian or not. So I seem to have a higher principal than liberty.

Slave contracts are much more extreme than very limited and particular contracts of specific performance for personal services. But in both cases the likely (or actual) practical consequences must matter if we are interested in libertarianism as a practical ideology. It is logically possible that libertarianism could be a welfare disaster. If it were, then most libertarians would want to think again. One theoretical problem with slave contracts (for those who oppose them) is that they seem to be on a continuum with (not really alarming) time-limited, bonded-labour contracts with guarantees of good treatment. But would many people really sign over all ownership in their bodies? It seems much less likely, and much less extreme, than suicide. And suicide seems to be something that should not be forcibly prevented.

>Ok, then say someone rents out a flat to someone else. Can he just change his mind in the middle of the renting period. I don’t think so.

Neither do I. He would have to buy out the tenant. I don’t see a problem here.

“I could be wrong about this, but I would be very surprised if all personal-service contracts were (in a libertarian society) automatically and universally interpreted as either enforceable or as unenforceable. The distinction is useful and so it will likely be made.”
>But why is it useful, if liberty is the highest principal? There is something else going on here.

I take liberty to be the highest principle regulating interpersonal relations. But I advocate it as a practical principle, not as something for every logically imaginable situation. So that practical principle is not contradicted but defended by explaining that personal-service contracts will probably be surrounded by safeguards that make them far from alarming in practice.

“A mere signature is highly unlikely to be enough, just because of the onerous nature of the contract (this is analogous with criminal evidence standards being higher than that of those for civil cases). Once such contracts are sufficiently hedged about with appropriate legal safeguards (including evidence that signers have “thought through” the consequences, and not signed on a whim, while drunk, misunderstanding what is involved, without legal witnesses, etc.), I would not expect such contracts to appear so alarming (if alarming at all) and thereby not to be an unacceptable consequence of libertarian principles (as I currently interpret them, at least, and I might be mistaken about my interpretation).”
>If that is true, then that says something about liberty. You need to have a control level that controls, whether someone has made a good decision to sign the contract. That we need such a level, basically says that people cannot always be let to make their own decision.

People do not need to have made a “good decision” for making a contract legitimate. But if someone is intending to enforce an alleged contract of specific performance for a personal service, then he had better be able to demonstrate “beyond reasonable doubt” that it is a valid contract: one entered into wittingly and willingly by the provider. That is merely a defence of liberty. It is only like requiring that anyone who carries out euthanasia had better have sufficient evidence that it really is what the client wittingly and willingly chose, and not murder or manslaughter masquerading as euthanasia.

Nico’s excellent thought experiment touches upon so many aspects of economic and personal activity in our debt based world.

The source of the problem is transactions where there is a time difference between one side’s payment and the other’s delivery of the good or service. Coupled with transactions based on risk things can get quite problematic.

Perhaps the answer is that one cannot use force to claim any future property from another person. This would protect against ‘exploitative’ (I use this term with great caution) transactions i.e. – I’ll take you off your sinking boat if you promise to be my slave forever more – as it would be impossible to claim another’s future work or wealth. Where a transaction is made contemporaneously however it is far easier for both sides to peacefully transact at the moment of the transaction, and for property rights to be enforced.

A social norm that tried to bring all transactions into the present would be more balanced, as it would require both sides to behave in future such that neither side would want to break an ongoing business relationship. Use of trused arbiters or escrows can help with this, even with things like home mortages, as the asset is fixed at the time of the transaction with the owner remaining the lender or escrow, so that it can be reclaimed if payments default. Under such a scenario no one would trade their future liver, as no buyer of this service would be able to enforce the deal.

This could also be used for personal, business or national debt. The European wranglings over Greek debt, for instance, would be easier if 1. assets had been tied to debt at the time the debt was issued and 2. the lenders realised debt could be defaulted on. This would lead to a far more balanced financial system, without many of the assymetric incentives that exist today.

“Perhaps the answer is that one cannot use force to claim any future property from another person.”

In that case you could not have investment contracts. If I invest in a company with the idea that in a few years time that company will make profits that I then have a claim on, I need to be able to make a contract about future profits. Otherwise I would not invest. But that is not even the underlying philosophical problem. Why is not using force to claim a future property from another person libertarian?

Social norms are nice, but they also do not solve the problem. What if someone breaks the social norm? Can he do that as a libertarian? If not, why not?

You cannot fix an asset like a home at the time of the transaction. That requires a buyer. Why would someone guarantee you to buy the home for a certain price in case you default? You would only default if by then the market price is lower, obviously.

And all contracts entail the thread of force. Otherwise they would not be contracts, but just a not binding promise.

Regarding investments, the approach would be to use smart contracts ensure future profits or payments are paid to the person who has lent the capital. At the present time of exchange of contracts the mechanisms for this are baked into the shares in the joint venture or company.
Force would still be needed if someone used the money to invent a widget then ran off with the widget instead of selling it through the agree company Widget’s Inc to which the shares had been tied, but the principle of trying to bring payments, shares, investments as close to the present as possible is worth persuing to reduce the risk of incentives to break a contract.

But the profits are not in the present. You would still just agree in the present that you have a claim on future profits. You simply cannot bring the profits into the present. If you could, everyone would do it. It is better to have profits now then later. And if such a contract is possible (and it has to be in order to do investments) then the billionaire can also invest into the liver of someone.

One more thought – a contract that requires force to enforce incentivises the other party to break the contract by force. This leads inevitably to governments, control structures and all sorts of horribleness.

Extreme examples aside, consider the PFI deals that built hospitals under Labour when UK gov were attempting to show they could balance the books.
In order to keep the cost off the balance books they signed extremely expensive PFI deals.
The cost of the hospital build is paid back over time, but is also bundled in with expensive service contracts, that need arbitration or some kind of intervention to change.

Such a contract inevitably puts the PFI provider in conflict with the hospital, as the incentives after the build are for one side to provide the cheapest service possible in order to maintain their margins, whilst the other side wishes to improve the service yet is overpaying for what it gets.

Unbundling this contract in the first place would leave the build cost as one contract, paid for in instalments as the work was done, and the service contract as a separate shorter contract, such that there is the opportunity to end the contract and appoint a new contractor if either side was not happy with the service, and could not resolve this. This approach would align incentives at the times of payments.
Of course there would still be a funding issue, regardless if public or private, and if a third party or builder owned the building pending full payment they might have to use force to evict a non paying tenant, but on balance the mutual incentives would work towards an efficient mutually acceptable outcome, rather than one that might involve lobbying government to overturn or enforce a contract in future.

Thus I’ll add ‘bringing to the present wherever possible’ to ‘unbundling’ as precursors to mutually supportive contracts and transactions which won’t need force in the future.

Disclaimer – still doesn’t answer liver donating, future sex paying contracts but it seems there are enough more mundane examples to work on in the meantime.

You can design contracts in all kinds of ways. That is an art in and off itself. I don’t have a problem with contracts demanding future profits as long as they are voluntary. I don’t see why they should not be allowed. But I do have a problem with contracts demanding the future use of someone’s body and that do not allow to get out of that contract.

I am not sure if anyone has picked up on this, apologies if so, but specific performance is not a common law remedy. In common law (apart from things like a Writ of Prohibition, now archaic), remedy was damages. Specific Performance is an equitable remedy, rooted in equity, that bastard parent of socialism. It is therefore, always at the court’s discretion, unlike a monetary damages claim (where the limited discretion is effectively the assessment of quantum of damages, not whether or not to award them).

Specific performance is usually found in matters such as compelling the sale of property, e.g. if you agree to sell a car, then pull out, since you wish to obtain a higher price or not sell. If the buyer really, really wants the car, and it’s really, really equitable that he gets it (and pays for it), the judge may grant specific performance.